The effects of new protectionism on the global economy within the scope of trade and the currency wars in the 21st century: An empirical analysis

Global trade is in a balance between protectionist policies and liberal policies. While in some periods, protectionist policies have gained weight in trade, liberal policies have gained weight in other periods. Neoliberal policies that gained speed after 1980 left their place to new protectionism after the 2008 Crisis. Protectionism that marked the 21st century has turned into a global war which start with new modern methods and spread with traditional tariff increases. In this study, the development process and final results of new protectionism in the 21st century have been examined. In the process leading to new protectionism, the effects of neoliberal practices that gained speed after 1980 were examined. Also, the global and regional effects of the trade and currency wars between the US and China were analyzed. According to the analysis results, after the 2008 Crisis, neoliberal policies have been replaced by protectionism that has spread over a wide area. Significant economic and commercial differences have emerged between the pre-crisis period and the post-crisis period. According to these results, the new protectionist policies implemented after the global crisis caused the global trade and economy to slow down. The trade wars have slowed the foreign trade and economic growth of the US and China. Besides, the global economy was negatively affected by trade wars. Global uncertainty has increased, investment and trade have declined. However, the conflict between the two countries continues to increase in the fields of technology, political and competition. In this study, the relationship between trade openness ratio and tariffs, non-tariff barriers, US dollar index and economic growth for the world, in general, was analyzed with the annual data for the period 1980-2019. For this purpose, the relationship between the series was examined by the ARDL bound test and Toda-Yamamoto Granger causality test. According to the application results, there is a cointegration relationship between the series, the series move together in the long run. Also, there is a two-way causality relationship between trade openness ratio and independent variables. These results are in line with expectations. There is a negative relationship between protectionist policies and trade openness ratio. There is a positive relationship between economic growth and the trade openness ratio. As a result, the effect of protectionist practices on the global trade openness ratio is quite evident.